FIRM’S DIVIDEND DECISION IN INDONESIA:CATER OR MATURE ?

Abstract

 The aim of this study is to find the motivation behind firm’s dividend decision in perspective of catering or life cycle theories. Conducting logistic regression for hypothesis testing, the study takes 222 Indonesia listed firms in period 2009 till 2014 as samples. The results of this study show that firms as dividend payers who in mature phase are firms with age below 33 years, have lower debt, larger size, and better profitable, while firms as dividend payers who setting their dividend decision based on catering theory are firms with age above 33 years, have lower debt, larger size and better profitable. The other interesting finding by the study is firms as dividend payers who in mature phase and also set their dividend decision based on catering theory are firms with age above 33 years, have lower debt, smaller size, and better profitable

Keywords

• Catering,Maturity,Dividend,Share Price,Profit,Debt,Size,Liquidity

Kaynakça

1. ADELEGAN, O. J. (2003). An Empirical Analysis of the Relationship between Cash Flow and Dividend Changes in Nigeria. R&D Management, 15(1), 35-49.
2. ACHARYA, V. V., ALMEIDA, H., & CAMPELLO, M. (2007). Is Cash Negative Debt? A Hedging Perspective on Corporate Financial Policies. Journal of Financial Intermediation, 16(4), 515–554.
3. BAKER, M., & WURGLER, J. (2004a). A Catering Theory of Dividends. The Journal of Finance, 59(30), 1125-1165.
4. BAKER, M., & WURGLER, J. (2004b). Appearing and Disappearing Dividends : The Link to Catering Incentives. Journal of Financial Economics, 73(2), 271-288.
5. BLACK, F. (1996). The Dividend Puzzle. The Journal of Portfolio Management, Special Issue, 8-12.
6. DEANGELO, H., DEANGELO, L., & STULZ, R. M. (2006). Dividend Policy and the Earned/Contributed Capital Mix : A Test of the Life-Cycle Theory. Journal of Financial Economics, 81(2), 227-254.
7. DREMAN, D. N., & LUFKIN, E. A. (2000). Investor Overreaction: Evidence That Its Basis Is Psychological. The Journal of Psychology and Financial Markets, 1(1), 61-75.
8. EISDORFER, A., GIACCOTTO, C., & WHITE, R. (2015). Do Corporate Managers Skimp on Shareholders' Dividends to Protect Their Own Retirement Funds?. Journal of Corporate Finance, 30, 257-277.

9. FAIRCHILD, R., GUNEY, Y., & THANATAWEE, Y. (2014). Corporate Dividend Policy in Thailand : Theory and Evidence. International Review of Financial Analysis, 31, 129-151.
10. FAMA, E. F., & FRENCH, K. R. (2001). Disappearing Dividends : Changing Firm Characteristics or Lower Propensity to Pay? Journal of Financial Economics, 60(1), 3-43.
11. FAMA, E. F., & FRENCH, K. R. (2002). Testing Trade-Off and Pecking Order Predictions about Dividends and Debt. The Review of Financial Studies, 15(1), 1-33.
12. GARENGO, P., NUDURUPATI, S., & BITITCI, U. (2007). Understanding the Relationship between PMS and MIS in SMEs : An Organizational Life Cycle Perspective. Computers in Industry, 58, 677-686.
13. GRULLON, G., MICHAELY, R., & SWAMINATHAN, B. (2002). Are Dividend Changes a Sign of Firm Maturity? The Journal of Business, 75(3), 387-424.
14. HANLON, M., & HOOPES, J. L. (2014). What do firms do when dividend tax rates change? An examination of alternative payout responses. Journal of Financial Economics, 114, 105-124.
15. JENSEN, M. C. (1986). Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers. American Economic Review, 76(2), 323-329.
16. KALAY, A., & LOEWENSTEIN, U. (1986). The Informational Content of the Timing of Dividend Announcements. Journal of Financial Economics, 16, 373-388.
17. LI, K., & ZHAO, X. (2008). Asymmetric Information and Dividend Policy. Financial Management, 37(4), 673-694.
18. LI, W., & LIE, E. (2006). Dividend Changes and Catering Incentives. Journal of Financial Economics, 80(2), 293-308.
19. LONGINIDIS, P., & SYMEONIDIS, P. (2013). Corporate Dividend Policy Determinants : Intelligent versus a Traditional Approach. Intelligent Systems in Accounting, Finance and Management, 20(2), 111-139.
20. MODIGLIANI, F., & MILLER, M. H. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment. The American Economic Review, 48(3), 261-297.
21. POLK, C., & SAPIENZA, P. (2009). The Stock Market and Corporate Investment: A Test of Catering Theory. The Review of Financial Studies, 22(1), 187-217.
22. PONTOH, W. (2015). Signaling, Bird in the Hand, and Catering Effect in Indonesia. Journal of Life Economics, 2(3), 1-24.
23. RAJAN, R. G., & ZINGALES, L. (1995). What Do We Know about Capital Structure? Some Evidence from International Data. The Journal of Finance, 50(5), 1421-1460.
24. STREBULAEV, I. A., & YANG, B. (2013). The Mystery of Zero-Leverage Firms. Journal of Financial Economics, 109(1), 1-23.
25. UDOMSIRIKUL, P., JUMREORNVONG, S., & JIRAPORN, P. (2011). Liquidity and Capital Structure : The Case of Thailand. Journal of Multinational Financial Management, 21(2), 106-117.